Inquiry into the Mangawhai community wastewater scheme

16 March 2012

Contents

The Auditor-General Lyn Provost has decided to carry out an inquiry into the Kaipara District Council’s management of the Mangawhai community wastewater scheme. This document sets out the terms of reference for the inquiry.

Background

The construction of the Mangawhai community wastewater scheme has been a significant project for the Kaipara District Council since 1998.

Local ratepayers and the Council have raised concerns about various aspects of the scheme, including the Council’s financial management and planning for the scheme. There has been a significant increase in the total cost of the scheme. Other concerns relate to the lawfulness of the Council’s decision-making processes and the development contributions and rates used to fund the scheme.

The Council has been carrying out a number of reviews of the scheme, including legal and financial reviews. The Council asked us to carry out an investigation into its decision-making, financial, and contract management processes for the scheme. We agreed to do so.

The inquiry

The inquiry will examine Kaipara District Council’s development, implementation and oversight of the Mangawhai community wastewater scheme (and any related projects), from inception, including:

the Council’s planning and decision-making, including how well it complied with its policies and strategies, and the legal and other requirements for decision-making;

the governance, management, and contracting arrangements for the project;

the Council’s financial management, monitoring, and reporting;

the funding for the scheme, including the use and setting of rates, borrowing, and development contributions;

the overall suitability and cost-effectiveness of the scheme that has been constructed.

The inquiry will also consider:

the role played by the Council’s auditor;

the role played by other relevant agencies; and

any other matters that the Auditor-General considers it desirable to report on.

The inquiry is being carried out under section 18(1) of the Public Audit Act 2001. We will publish a report when the inquiry is completed. It will also be presented to Parliament.

How to contribute

We encourage members of the public to let us know their views on the Mangawhai Wastewater Scheme and any concerns they may have about how it has been developed and implemented by the Council and its contractors.

We will arrange some community meetings in Mangawhai for people to talk to us directly.

Background information

The role of the Auditor-General

Under the Public Audit Act 2001, the Auditor-General is responsible for annual audits, performance audits, and inquiries into how public entities use their resources. She is also responsible for the audit of long-term plans. For each public entity, she appoints an auditor and audit firm to carry out the annual audit and any other required audit work on her behalf.

The Auditor-General is an officer of Parliament, and so is independent of the central and local government entities that we audit. The Auditor-General cannot be ordered to conduct an inquiry and has responsibility for determining the nature and scope of any inquiry. The Auditor-General has wide powers to request information, and decides what information to disclose or include in a report.

Conflict of interest

The Auditor-General’s different roles can come into conflict if an inquiry has to consider the adequacy of the work done by another part of the organisation. The terms of reference for this inquiry specify that we will consider the role played by the auditor. The Council’s audit is carried out by appointed auditors within Audit New Zealand, which is a business unit of the Auditor-General. The Council was aware of this conflict when it asked the Auditor-General to inquire.

The Auditor-General has put in place the following arrangements to manage this situation:

The inquiry will be carried out by staff in the Auditor-General’s other business unit, the Office of the Auditor-General, with assistance from external advisers as needed. It will be overseen by the Assistant Auditor-General Legal.

Audit New Zealand will not be involved in the inquiry, other than to provide information on its work at the Council in recent years.

The Office of the Auditor-General will engage an independent person to review the audits of the relevant annual reports and long term plans and will include comment from the independent reviewer in the final report.

How we will carry out this inquiry

The inquiry will have four broad phases:

Gathering information: we will review relevant documentation held by the Council, its contractors and other relevant individuals and organisations, meet with people from the Council, its contractors and the community, and invite comments from interested parties.

Analysis: we will analyse the information we have gathered and develop our preliminary views. We will engage external experts to assist with this work as needed.

Development of a draft report and consultation: Once we have prepared a working draft of the report, we will consult as necessary on the different parts of the report to ensure that it is factually accurate and that the rights of any affected parties are properly protected.

Publication: we will then finalise and publish the report, and present it to the Council and to Parliament.

Confidentiality of submissions

Information held by the Office of the Auditor-General, including all submissions and comments to us, is confidential and is not subject to the Official Information Act 1982. Our policy is not to disclose details of who has raised concerns with us. The only information we will release on this inquiry will be that contained in the final report.

General policy on comment during inquiries

Once the Auditor-General has begun an inquiry, the Office will not normally make any public comment on the substance or progress of the inquiry until we release a report. This policy protects the rights of those involved in the inquiry and our ability to carry out the work effectively and efficiently. It is hard to predict what might emerge or transpire as we carry out an inquiry so it is equally hard to predict when we might be ready to report our findings.